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Thursday, March 17, 2016

FinTech & Investing -- Been There, Done That, Move On !!!

FinTech, a hot topics for finance sector at the moment. What's exactly is FinTech ? According to Wikipedia, FinTech stands for Financial Technology, is an economic industry composed of companies that use technology to make financial services more efficient. When comes to investing in stock market, the term robo-advisers tells all about FinTech.

Well, FinTech is not new to me as back in 2013 I already started to develop apps to assist me in investing without actually knowing that is called FinTech (or robo-advisers). I just did that as I wanted something at that time but couldn't find in the commercial market that could offer me what I wanted.

The first app that I developed then which I called it "iStockApp" consisted of 3 cores, iStockData, iNews and iPortfolio.

iStockData

As shown in the above screenshot, iStockData displayed the various stock information like Price, Performance, Valuation and Technical Analysis.

iNews

As shown in the above screenshot, iNews used RSS to fetch the latest market news from the various websites on the internet.

iPortfolio

As shown from the above screenshots, iPortfolio basically is a portfolio manager that capture the latest stock prices (from Yahoo Finance) and then displayed the return of the stocks and the overall portfolio. It also compared the performance of the portfolio with benchmark index in term of Volatility, Cumulative Return (with/without dividend), Annualized Return (with/without dividend) and Sharpe Ratio. In addition, it can also generate graphical representation of the portfolio on its Portfolio Allocation, Volatility, Annual Return and Sharpe Ratio.

The second app that I developed was in 2014, naming it "iPortfolioBuidler".

As shown in the above screenshots, it is an app that by inputting the stock name, the total capital, the criteria of risk and return for the portfolio and based on historical data it can generate the portfolio with the designated quantity (through some algorithm) and display the generated portfolio performance (Volatility and Sharpe Ratio) as compared with the benchmark index.

The third app that I developed in 2014 was a profit and loss calculator, "PLCalculator".

As shown from the above screenshot, by inputting the capital amount, the stock price and initial quantity, the app can generate the exact quantity (nearest to the 100 shares) one could buy with the capital after including all the brokerages and commissions. It then displays the next +/- 10 bids from the buy price to see how much profit or loss (after including all the brokerages and commissions) one can get.

The fourth app that I intended to develop but never get to do it due to laziness :). Basically, this fourth app has the ability to extract all the financial information from the company PL Statement and Balance Sheet either from an inputted PDF file or an URL that points to the PDF file. With those extracted information, it will do a quick display of the Revenue, Profit, EBITDA, EPS, NAV, etc and based on these information calculate some of the financial ratio like ROE, Current Ratio, Quick Ratio, P/B Ratio, Debit/Equity, etc. In doing so, it will save me times from reading up all those earning reports to search for the information.

If I integrate all these apps together to form a framework, it will more or less like the robo-advisers which is the talking point now. The current robo-advisers if I am not wrong only offer to institution, funds and accredited investors, and retail investors will never get the chance to use it. Well, since an average Joe like me can develop something similar to a robo-advisers, and there are many people out there doing a better job than me, don't see retail investors can miss out anything on FinTech too :)

However, since the start of 2015 when I analyzed the 3 market scenarios (Bull Marches on, Big Bear Strikes Back and The Lost Decade) and confirmed that volatility will be the new norm in stock market, I have stopped using and enhancing those apps (apart from the PLCalculator which is still very handy). Main reason was since I developed those, I knew all the pros and cons of FinTech. I believed that volatility being the new norm in stock market has to do with the use of technology. Can you fight a fire with fire by using FinTech to counter volatility or you will get burn by fire eventually ? Since then, I have adopted a "strategic based approach" (as can seen from my portfolio the Cashless/Strategic section) and I strongly believe that is the way to have an edge over FinTech. The true hard fact is despite technology can allow one to calculate chunk of data within nanoseconds in making a decision to buy or sell, it can never come close to what a human brain could do -- coming out strategy instantly or spontaneously to react to changes (sudden changes).